Local entrepreneurs engaged in public contracts in Togo frequently voice a significant concern: « Les banques ne nous accompagnent plus. » This sentiment highlights a growing impediment for the nation’s private sector. Small and medium-sized enterprises (SMEs) and state contractors are experiencing increasingly stringent conditions for obtaining bank credits and pre-financing, which in turn slows down the progress of numerous infrastructure projects and public works across Togo.
The spiral of unsettled debts
At the core of this banking sector’s reluctance lies a systemic issue: the accumulation of unpaid invoices following the execution of public contracts. To carry out work commissioned by public administrations, companies heavily rely on bank loans. However, when payment delays occur from the public treasury or government entities, the repayment chain is broken, leaving businesses unable to meet their financial obligations to banks on time.
Dr. LANDOZI Saharou’s analysis: « A direct impact on bank profitability »
In an analysis published on August 31, 2026, Dr. LANDOZI Saharou, a corporate finance specialist and economist, shed light on the banking mechanisms currently restricting access to credit:
« When a public contract experiences payment delays, the associated bank credit progressively deteriorates, eventually falling into the category of doubtful or non-performing loans (NPLs). In compliance with the prudential requirements set by the Banque Centrale des États de l’Afrique de l’Ouest (BCEAO), the bank is then compelled to tie up its equity by setting aside substantial provisions. This constraint significantly reduces its liquidity and its capacity to grant new financing. »
This phenomenon has been evident in the sector’s overall performance: the Togolese financial market recorded cumulative net losses at the close of the 2025 fiscal year within the UMOA zone. These losses were attributed to the heavy burden of provisions mandated to cover non-performing loans linked to public procurement projects.
On the ground, managers of construction and public works (BTP) SMEs describe daily operational paralysis:
- « We find ourselves caught between two demands. On one side, the State insists that work progresses according to specifications. On the other, banks freeze our overdraft facilities as soon as an invoice is delayed. We act as a buffer, absorbing cash flow shocks with our own funds, which depletes our working capital. »
- « Banks are now demanding collateral that is almost impossible to provide for simple market pre-financing. Without a public guarantee or endorsement mechanism, small local businesses can no longer compete against larger corporations. »
Recommendations: towards equitable risk sharing
To address this impasse, Dr. LANDOZI Saharou and several financial experts advocate for a review of public procurement governance, proposing a risk-sharing model:
- Creation of a dedicated guarantee fund: To secure commitments made by SMEs to banks, thereby reducing provisioning rates.
- Utilization of escrow accounts: To ensure the traceability and direct allocation of public payments towards the repayment of granted bank loans.
- Securitization of arrears: To transform accumulated public debts into negotiable securities, cleaning up bank balance sheets and freeing up liquidity.
According to Dr. LANDOZI Saharou, implementing these reforms would enable commercial banks to reclaim their vital role as economic drivers: « remaining profitable while continuing to finance national development and public procurement securely. »
